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This volume details internal affairs in the Philippines. Conflicts between religious and government authorities continue, even with a new governor and a new archbishop. Chinese immigration needs checking, and some Japanese pirates have threatened Luzon. There is still corruption in the government and military. Meanwhile in Japan, the Franciscan missionaries were crucified. The Spanish treasure ship San Felipe was shipwrecked there and its cargo seized by the emperor, which is affecting trade here. Peace with Japan is uncertain, and an ambassador Luis de Navarrete was sent, with favorable results.
Governor Tello writes to the King about recent developments. Tello is improving Manila by trade regulations. Rebels are being punished. He writes about corrupt officials and undisciplined soldiers. The farming natives are overworked and underpaid. The royal treasury is mismanaged and offices engage in fraud.
The religious sector suggests that officials be inspected regularly by the church prelates. They want a storehouse built for rice and supplies. The natives should not be harassed to provide for the Spaniards. With cooperation, all can be aided during famine and prices can be regulated better. Bishops complain about the neglected state of the people, and that the governor is extravagant, corrupt, and opportunistic. The Audiencia complains about Tello's irregularities of procedure.
Tello writes to the King, saying that he is sick of accusations and the offenders must be punished. Many revolts throughout the colony are starting, and the soldiers and weapons are not enough for fighting. A major revolt in Cagayan was stopped.
In Spain, Felipe III has succeeded his father Felipe II on the throne.
Tello's general report on the colony states the need for more missionaries. Hospitals and seminaries are in good condition. The Jesuits have started schools for the natives to learn the Spanish language and other subjects. Natives are required to formally submit and pay homage to the Spanish crown but it is difficult to enforce. Tello suggests that the Chinese must be driven out of Manila. He writes about many infrastructure projects done in his rule. Trade between Cebu and Peru is starting.
Laws by the Audiencia indicate economic conditions of that time. One act forbids leaving the islands without the governor's permissios. Prisons must be checked regularly and justice must be speedy. Another act regulates supplies for Manila. Native hunters will be contracted and paid for buffalo meat. The natives and the Chinese are obliged raise fowls and swine, which they sell in the city. The prices for these goods are fixed by authorities. Reports must be sent to the King and his council.